St Joe stock appears to rebounding, why?

[wrobert]

If the real estate market is not in any type of a recovery, why is it that it appears St. Joe is on a bit of a rebound?

Source: Google Finance

[bent T]

Because they are being bought by Disney. I heard this a few weeks ago and figured if it was true the stock would be on the rise. I looked at the ticker and didn't see any change so I dismissed it as rumor. It may well be but think about it.

If they tried to acquire any large amount of land like they did secretly in Orlando 40 or so years ago people would know and prices would go through the roof.

What a coup for Disney. For the price of a relatively cheap stock they get tens of thousands of acres dirt cheap on which to build a park and housing, at the beach, next to a new international airport, a port for cruises, close to midwestern and southern drive-in markets, etc....

It is supposed to be announced in October.

Or it could be because they are advertising on this site.

[wrobert]

Because they are being bought by Disney. I heard this a few weeks ago and figured if it was true the stock would be on the rise. I looked at the ticker and didn't see any change so I dismissed it as rumor. It may well be but think about it.

If they tried to acquire any large amount of land like they did secretly in Orlando 40 or so years ago people would know and prices would go through the roof.

What a coup for Disney. For the price of a relatively cheap stock they get tens of thousands of acres dirt cheap on which to build a park and housing, at the beach, next to a new international airport, a port for cruises, close to midwestern and southern drive-in markets, etc....

It is supposed to be announced in October.

Or it could be because they are advertising on this site.

I had heard the Disney rumor but dismissed it. Since living here I am constantly hearing that Disney or Six Flags is going to buy some large plot of land. Personally, I wish they would since my wife loves to go to those places it would save me a bunch of money over the coming years. One of the large plots I hear they want is about 15 minutes from the house. I wonder if I will be able to see the fireworks every night?


Source: sowal and real estate salesperson(s)

[AAbsolute]

The Disney thing doesn't make a lot of sense to me understanding that they don't need 800,000 acres to build a new theme park. The name that I keep hearing from people inside is LUK. I have watched LUK grow from a market cap. of 2 Billion to 10.24 Billion compared to 4 Billion, and shrinking, for JOE. LUK has revenues as well which is something that JOE really doesn't have today. The purchase fits the bill for LUK's rules of the road.

[iqueequeg]

A little off topic, buy maybe one of you business guys can clear this up for me. When a company wants to acquire a company, typically they pay a premium over the current stock price (Microsoft's attempt to buy Yahoo for example). Why wouldn't the company just buy as much stock as possible at current prices before making their bid? I understand the price of the stock would go up with a large purchase like that, but you'd still be able to acquire a substantial amount for lower than your ultimate purchase price (or so it would seem to me).

[AAbsolute]

A little off topic, buy maybe one of you business guys can clear this up for me. When a company wants to acquire a company, typically they pay a premium over the current stock price (Microsoft's attempt to buy Yahoo for example). Why wouldn't the company just buy as much stock as possible at current prices before making their bid? I understand the price of the stock would go up with a large purchase like that, but you'd still be able to acquire a substantial amount for lower than your ultimate purchase price (or so it would seem to me).

Big blocks bought for the acquisition of a company must be legally Noticed by the purchaser.

[Killer Whale]

If the real estate market is not in any type of a recovery, why is it that it appears St. Joe is on a bit of a rebound?

Source: Google Finance

Where have you been?

There was a crash on Wall Street last week, a bank called Lehman Brothers went bust, another called Merrill Lynch was sold for a song, and the Treasury Secretary announced a $700 billion bail out funded by the US taxpayer (God bless you one and all!)

This caused stocks linked to finance and real estate (the base cause of the crash was billion dollar losses on toxic derivatives comprised of sub prime real estate loans) to bounce big. There was your rebound.

Down again today as the ramifications and consequences of this scarcely believable bail out are sinking in and the market waits to see what Congress will do next.

[goofer44]

A little off topic, buy maybe one of you business guys can clear this up for me. When a company wants to acquire a company, typically they pay a premium over the current stock price (Microsoft's attempt to buy Yahoo for example). Why wouldn't the company just buy as much stock as possible at current prices before making their bid? I understand the price of the stock would go up with a large purchase like that, but you'd still be able to acquire a substantial amount for lower than your ultimate purchase price (or so it would seem to me).

You are right. An acquiring company can buy up to 4.9% for investment purposes. Anything at or above 5% they must file a 13_D with the SEC. They express their intent in the 13-D, such as investment only or they may increase from time to time. If they launch a tender offer, at a premium price, for the target company, it is completely legal for them to have bought the 4.9% at lower prices before they have declared their tender offer. Note: if you look at stock holdings at giant mutual fund cos such as Fidelity or Vanguard, you will see they have 13-D filings on many of their holdings. All entities must file a 13_D if they get to 5% or higher.

[wrobert]

Where have you been?

There was a crash on Wall Street last week, a bank called Lehman Brothers went bust, another called Merrill Lynch was sold for a song, and the Treasury Secretary announced a $700 billion bail out funded by the US taxpayer (God bless you one and all!)

This caused stocks linked to finance and real estate (the base cause of the crash was billion dollar losses on toxic derivatives comprised of sub prime real estate loans) to bounce big. There was your rebound.

Down again today as the ramifications and consequences of this scarcely believable bail out are sinking in and the market waits to see what Congress will do next.

St. Joe was at $35 a month ago. It is at $39 right now. If it was being negatively impacted I would have expected it to be lower.


Source: Google Finance

[SHELLY]

St. Joe Company: A Clear Case of Overpromising

In a recent edition of Value Investor Insight, Robert Williamson, of Williamson McAree Investment Partners, explained why he has a short position in St. Joe Company (JOE).

[One] of your shorts, St. Joe Company [JOE], has both proponents and detractors in the value-investing community. Why are you among the latter?
RW: We spoke earlier about overpromising, and St. Joe is among the most promotional companies out there. After paring its business down, the company basically consists of about 610,000 acres of northwest Florida land for which it plans to define the best uses, secure entitlements and approvals, and then sell off to developers. To hear the company tell it, this land is a goldmine that you just can’t replicate. Having driven from Tallahassee to their main resorts on the Gulf of Mexico, I’m quite confident that in that first 80 miles or so of the drive, no one in my lifetime is going to want to live there. A lot of the land is just dead, forested area. We keep close tabs on land prices and activity in their existing developments and it’s clear the real estate market for them is abysmal. As an example, one residential lot in their WaterColor development – which is beautiful, by the way – has traded hands five times since 2003. It sold for $331,000 in 2003, got as high as $690,000 in 2004, and sold earlier this year for $200,000. That’s a 70% drop from the peak.

Two developments they were talking up a year ago were WindMark Beach, on the Gulf coast southwest of Tallahassee, and RiverTown, which is in Jacksonville. From our contacts in Florida, we’re told that there hasn’t been a single home started in either development this year. That tells you something about the vibrancy of the market. Just working off the existing unsold inventory of houses will take years, and that doesn’t even take into consideration all the existing lots which have been sold but don’t yet have houses. We could imagine St. Joe not having any meaningful sales outside of just raw acreage for two or three years.

The company has also made a lot of the fact that they donated land and expect to benefit greatly from a new airport in Panama City. I’ve been in and out of the existing airport and to me it seems perfectly fine and not terribly busy. In fact, traffic in that airport was down 7% in 2006, 5% in 2007 and so far this year is down another 10%. They think they need a new airport? If I were a local taxpayer I’d be a bit upset about that.

The shares cratered near the end of last year, but at a recent $37.25 are up nearly 18% in the past year. What downside do you see?

RW: The acreage can be broken into three buckets: 45,000 acres for primary and secondary home development that are already entitled, 95,000 acres that are intended to be entitled, and the rest which is timberland. For each piece we’ve done a discounted-cash-flow analysis, based on what we think are conservative assumptions about sale prices and margins. For the timberland, we assume they sell the entire inventory over a five-year period at 80% operating margins and a 15% tax rate. We assume prices start at $2,000 per acre and climb 3% annually, which is conservative given that they sold such land for an average $1,350 per acre in the second quarter. That gives a total value of $530 million for the rural acreage.

The entitled acres we assume are sold over a 20-year period, at 50% operating margins and a 35% tax rate. Here we assume prices start at $100,000 per acre and climb 3% annually. That values these acres at $700 million.

The last piece is the to-be-entitled acres, which we assume are sold starting at $70,000 per acre over a 30-year period, again with 50% operating margins and a 35% tax rate. That gives a value for the entitlement pipeline of $780 million. The company has no net debt, so our fair value adds up to about $2 billion, or $20 per share. The company can dress up quarterly operating results from time to time by selling timberland at their discretion, but we just see a big value hole here that will be tough to climb out of.

http://seekingalpha.com/article/9342...-overpromising

----------------------------------------------------

[TheSheep]

The last piece is the to-be-entitled acres, which we assume are sold starting at $70,000 per acre over a 30-year period, again with 50% operating margins and a 35% tax rate. That gives a value for the entitlement pipeline of $780 million. The company has no net debt, so our fair value adds up to about $2 billion, or $20 per share. The company can dress up quarterly operating results from time to time by selling timberland at their discretion, but we just see a big value hole here that will be tough to climb out of.
http://seekingalpha.com/article/9342...-overpromising
----------------------------------------------------

Lady Shelly, may I add fuel to this implosive expose? Thank you kindly.

The entitlement process is one that has many, varying components. it is the most difficult stage in the development land-cycle, it is the one wheeler with the juggling ball-seal.

1. Comprehensive Plan Review/Development of Regional Impact (DRI)
2. Re-zoning
3. Concurrency
4. Wetland Permitting & Mitigation - The Hidden gem or Rotted Egg
5. Site Plan Approval
6. Architectural Approval
7. Engineering/Site Design Approval
8. Land Subdivision and Plat Approval

More or less the above, inclusions occur.

To ASSume that there will be 100% success (entitled for what?), on properties that are not yet entitled mainly because they may be the most difficult to entitled (see bold use of bold above), is sheep shicakes.

As this is an area of our companies greatest strength and angle of attack, I would consider these properties, in the blind, to be worth zipponada...rather, an impending tax liability such as the historical noose about the JOE neck.

RW, to you, I would prefer a much lighter valuation. Perhaps, in faith, 25% of what you proffer at 75% operationals?

Regards (Ms. Shelly),

The Complete Sheep

[Capricious]

If the real estate market is not in any type of a recovery, why is it that it appears St. Joe is on a bit of a rebound?

Source: Google Finance

A few minutes before the close, Joe down almost 10%

Along with almost everything else.


Capricious

[wrobert]

A few minutes before the close, Joe down almost 10%

Along with almost everything else.


Capricious

But still higher than when I bought last month by almost 10%. I had always wanted to own stock in St. Joe so I did so. I was not expecting any movement for a couple of years, when I checked it a day or so ago and saw it was at $41 that is why I was asking questions. I figured something must be up, but it appears not, unless Disney saves me.

[scooterbug44]

Disney is a rumor they batt around every so often to goose the RE market - like the Freeport Ritz-Carlton!

Bear in mind that the last time Disney made a major land purchase in Florida, they did it w/ a level of secrecy the CIA would do well to emulate.

[Capricious]

Disney is a rumor they batt around every so often to goose the RE market - like the Freeport Ritz-Carlton!

Bear in mind that the last time Disney made a major land purchase in Florida, they did it w/ a level of secrecy the CIA would do well to emulate.

Back in '93 or so, there were rumours that Silver Dollar City was coming
to the panhandle. I recall reading Hilton's comments in the newspaper
at the time concerning that.

Noth'n ever came of it. As with most rumours.

Which doesn't mean that Joe may not be a buy.



Capricious

[Busta Hustle]

you know what would really make this beach complete and the area re market boom to a frenzy again? if we could get a nice arcade with some skee ball, an amusement park with a wooden rollercoaster and some challenging beach goofy golf courses!

[Jdarg]

There are many days when I think that Heritage USA would be the perfect fit on the Panhandle.

[ame]http://en.wikipedia.org/wiki/Heritage_USA[/ame]

[TreeFrog]

There are many days when I think that Heritage USA would be the perfect fit on the Panhandle.

http://en.wikipedia.org/wiki/Heritage_USA

Let's put that in PC Beach, whaddaya say?

[Bob]

St. Joe Company: A Clear Case of Overpromising

In a recent edition of Value Investor Insight, Robert Williamson, of Williamson McAree Investment Partners, explained why he has a short position in St. Joe Company (JOE).

[One] of your shorts, St. Joe Company [JOE], has both proponents and detractors in the value-investing community. Why are you among the latter?
RW: We spoke earlier about overpromising, and St. Joe is among the most promotional companies out there. After paring its business down, the company basically consists of about 610,000 acres of northwest Florida land for which it plans to define the best uses, secure entitlements and approvals, and then sell off to developers. To hear the company tell it, this land is a goldmine that you just can’t replicate. Having driven from Tallahassee to their main resorts on the Gulf of Mexico, I’m quite confident that in that first 80 miles or so of the drive, no one in my lifetime is going to want to live there. A lot of the land is just dead, forested area. We keep close tabs on land prices and activity in their existing developments and it’s clear the real estate market for them is abysmal. As an example, one residential lot in their WaterColor development – which is beautiful, by the way – has traded hands five times since 2003. It sold for $331,000 in 2003, got as high as $690,000 in 2004, and sold earlier this year for $200,000. That’s a 70% drop from the peak.

Two developments they were talking up a year ago were WindMark Beach, on the Gulf coast southwest of Tallahassee, and RiverTown, which is in Jacksonville. From our contacts in Florida, we’re told that there hasn’t been a single home started in either development this year. That tells you something about the vibrancy of the market. Just working off the existing unsold inventory of houses will take years, and that doesn’t even take into consideration all the existing lots which have been sold but don’t yet have houses. We could imagine St. Joe not having any meaningful sales outside of just raw acreage for two or three years.

The company has also made a lot of the fact that they donated land and expect to benefit greatly from a new airport in Panama City. I’ve been in and out of the existing airport and to me it seems perfectly fine and not terribly busy. In fact, traffic in that airport was down 7% in 2006, 5% in 2007 and so far this year is down another 10%. They think they need a new airport? If I were a local taxpayer I’d be a bit upset about that.

The shares cratered near the end of last year, but at a recent $37.25 are up nearly 18% in the past year. What downside do you see?

RW: The acreage can be broken into three buckets: 45,000 acres for primary and secondary home development that are already entitled, 95,000 acres that are intended to be entitled, and the rest which is timberland. For each piece we’ve done a discounted-cash-flow analysis, based on what we think are conservative assumptions about sale prices and margins. For the timberland, we assume they sell the entire inventory over a five-year period at 80% operating margins and a 15% tax rate. We assume prices start at $2,000 per acre and climb 3% annually, which is conservative given that they sold such land for an average $1,350 per acre in the second quarter. That gives a total value of $530 million for the rural acreage.

The entitled acres we assume are sold over a 20-year period, at 50% operating margins and a 35% tax rate. Here we assume prices start at $100,000 per acre and climb 3% annually. That values these acres at $700 million.

The last piece is the to-be-entitled acres, which we assume are sold starting at $70,000 per acre over a 30-year period, again with 50% operating margins and a 35% tax rate. That gives a value for the entitlement pipeline of $780 million. The company has no net debt, so our fair value adds up to about $2 billion, or $20 per share. The company can dress up quarterly operating results from time to time by selling timberland at their discretion, but we just see a big value hole here that will be tough to climb out of.

http://seekingalpha.com/article/9342...-overpromising

----------------------------------------------------

how do they figure 35 percent when joe can 1031 all they want?

[AAbsolute]

how do they figure 35 percent when joe can 1031 all they want?

I don't think they can 1031.

[YoungFT]

how do they figure 35 percent when joe can 1031 all they want?

I'm no accountant but I don't believe JOE will be exchanging any of their existing property for property they don't already own.

As far as the point of view that JOE is overvalued it all comes down to the assumptions.

Is a reasonable assumption around entitled acreage really as low as $100,000 per acre? I don't ever recall a time in the past 8 years when you could buy a full acre in any JOE community for anything close to $100K. I could be mistaken - it's been known to happen.

I also think the margin assumptions are pessimistic. When values stabilize (it will happen eventually), JOE's "adjusted" model is pretty well positioned to do better than 50% margins.

I can guarantee you this: the market will rise and fall going forward. That you can bet your house on!

[AAbsolute]

I'm no accountant but I don't believe JOE will be exchanging any of their existing property for property they don't already own.

As far as the point of view that JOE is overvalued it all comes down to the assumptions.

Is a reasonable assumption around entitled acreage really as low as $100,000 per acre? I don't ever recall a time in the past 8 years when you could buy a full acre in any JOE community for anything close to $100K. I could be mistaken - it's been known to happen.

I also think the margin assumptions are pessimistic. When values stabilize (it will happen eventually), JOE's "adjusted" model is pretty well positioned to do better than 50% margins.

I can guarantee you this: the market will rise and fall going forward. That you can bet your house on!

My Friend, I think Rivercamps is currently selling for below 100,000 per acre when you consider the overall scope of the neighborhood and divide that by the number of lots. It could be true for Watersound North as well.

[Miss Kitty]

...it is rebounding because I am coming back to WC.

[Jim Tucker]

Disney is a rumor they batt around every so often to goose the RE market - like the Freeport Ritz-Carlton!

Bear in mind that the last time Disney made a major land purchase in Florida, they did it w/ a level of secrecy the CIA would do well to emulate.

That's the point. By buying St. Joe they get everything in one fell swoop at the price of the stock, not the real estate. I doubt it's true but it's different than the same old rumor we've been hearing for 30 years about land purchase.

[fisher]

how do they figure 35 percent when joe can 1031 all they want?

I don't believe you can 1031 in a cash sale. Only when you swap like kind property. Are you saying that Joe won't be selling any land for cash, they will only be trading land for land in the future??????

[fisher]

I'm no accountant but I don't believe JOE will be exchanging any of their existing property for property they don't already own.

As far as the point of view that JOE is overvalued it all comes down to the assumptions.

Is a reasonable assumption around entitled acreage really as low as $100,000 per acre? I don't ever recall a time in the past 8 years when you could buy a full acre in any JOE community for anything close to $100K. I could be mistaken - it's been known to happen.

I also think the margin assumptions are pessimistic. When values stabilize (it will happen eventually), JOE's "adjusted" model is pretty well positioned to do better than 50% margins.

I can guarantee you this: the market will rise and fall going forward. That you can bet your house on!

You need to consider the green space, common areas, etc in calculating the sales price per acre. You also need to consider ALL JOE entitled acres, not just the small portion they own along 30A. The properties in Deland, Jacksonville and Tallahassee will likely sell for well below $100k and only a small portion of the entitled property is in premier locations like Watercolor and Watersound.

In fact, $100k might be way TOO HIGH for an average.

[YoungFT]

Great points. Thanks for clarifying.

So that I understand, Watersound West is a 62 acre development with 199 units planned. If the 62 acres were sold at 100,000 JOE would have generated a sale price of 6.2mm. Allocating that cost out to the 199 units you have a homesite in Watersound West at a cost basis to the developer of $31K? The developer would want to mark that land up to cover his risk and carrying costs. So maybe 100% markup? This results in prices at Watersound West of less than 75K and a quick look on the website shows homesites listed around 300K on average.

I'm thinking the cost basis assumption was way too low.

Even factor in an additional 50% reduction in land prices and you're still at a higher level.

Unless I missed something, I think there is some good value in JOE if you have the right time horizon - which is long!

[SWGB]

SHELLY, I thought shorting was now illegal?

[Killer Whale]

St. Joe was at $35 a month ago. It is at $39 right now. If it was being negatively impacted I would have expected it to be lower.


Source: Google Finance

Joe is a small fish getting buffeted by the huge ocean swells of the most volatile stock market conditions since the Great Wall Street Crash.

If a financial bailout for the banks is agreed today it will go up big again. If not (or a near resolution looks unlikely) it will go down big.

Nothing to do with Disney or anything else stock specific.

[AAbsolute]

Great points. Thanks for clarifying.

So that I understand, Watersound West is a 62 acre development with 199 units planned. If the 62 acres were sold at 100,000 JOE would have generated a sale price of 6.2mm. Allocating that cost out to the 199 units you have a homesite in Watersound West at a cost basis to the developer of $31K? The developer would want to mark that land up to cover his risk and carrying costs. So maybe 100% markup? This results in prices at Watersound West of less than 75K and a quick look on the website shows homesites listed around 300K on average.

I'm thinking the cost basis assumption was way too low.

Even factor in an additional 50% reduction in land prices and you're still at a higher level.

Unless I missed something, I think there is some good value in JOE if you have the right time horizon - which is long!

Using the article attached by Shelly the value of all the real estate holdings is about 2 billion. The value of all the stock today is about 4 billion. It sounds like JOE would have to get double the rate per acre rationalized in the article just to be worth the value of todays stock price.

[AAbsolute]

Great points. Thanks for clarifying.

So that I understand, Watersound West is a 62 acre development with 199 units planned. If the 62 acres were sold at 100,000 JOE would have generated a sale price of 6.2mm. Allocating that cost out to the 199 units you have a homesite in Watersound West at a cost basis to the developer of $31K? The developer would want to mark that land up to cover his risk and carrying costs. So maybe 100% markup? This results in prices at Watersound West of less than 75K and a quick look on the website shows homesites listed around 300K on average.

I'm thinking the cost basis assumption was way too low.

Even factor in an additional 50% reduction in land prices and you're still at a higher level.

Unless I missed something, I think there is some good value in JOE if you have the right time horizon - which is long!

IMO, Watersound West Beach contains JOE's most valuable entitled property. Most everything else in their holdings portfolio is worth 1/30th per acre on average.

[dunefrog]

IMO, Watersound West Beach contains JOE's most valuable entitled property. Most everything else in their holdings portfolio is worth 1/30th per acre on average.

Why would WWB be more valuable than Watersound Beach or WaterColor? Granted WC is lower elevation, but it is also next to Seaside, which I think increases its value. WB appears to be identical topographically to WWB. But WB has much more beachfront, a beachclub, and dune lake buffers on both sides. Doesn't WWB have other developments right next door and much less beach/view. Am I mistaken? I've never actually seen WWB. Thanks.

[Miss Kitty]

SHELLY, I thought shorting was now illegal?

Excellent question! Are shorters like flippers?

[Killer Whale]

Excellent question! Are shorters like flippers?

Kinda. In that they are speculators. Otherwise not really.

They borrow a stock and sell it. Then they buy it back and return it to its owner.

If the stock has gone down in the interim they make profit from the difference in price bought and sold. If it has gone up vice versa.

[AAbsolute]

Why would WWB be more valuable than Watersound Beach or WaterColor? Granted WC is lower elevation, but it is also next to Seaside, which I think increases its value. WB appears to be identical topographically to WWB. But WB has much more beachfront, a beachclub, and dune lake buffers on both sides. Doesn't WWB have other developments right next door and much less beach/view. Am I mistaken? I've never actually seen WWB. Thanks.

IMO, JOE doesn't show much in their portfolio for Watersound Beach or Watercolor. Most of their holdings in those neighborhoods have been sold. West Beach is South of 30A and is probably only 12% to 15% sold out.

[fisher]

Great points. Thanks for clarifying.

So that I understand, Watersound West is a 62 acre development with 199 units planned. If the 62 acres were sold at 100,000 JOE would have generated a sale price of 6.2mm. Allocating that cost out to the 199 units you have a homesite in Watersound West at a cost basis to the developer of $31K? The developer would want to mark that land up to cover his risk and carrying costs. So maybe 100% markup? This results in prices at Watersound West of less than 75K and a quick look on the website shows homesites listed around 300K on average.

I'm thinking the cost basis assumption was way too low.

Even factor in an additional 50% reduction in land prices and you're still at a higher level.

Unless I missed something, I think there is some good value in JOE if you have the right time horizon - which is long!

You continue to miss the big picture.

You are still focusing on 62 acres out of the 10's of thousands of entitled land. Even if the WSWB land is worth more than $100k per acre, the other 10's of thousands of acres are worth a small fraction of the WSWB property. The WSWB property at $200k an acre (way too high when considering green space, roads, etc) is only worth $12.4 million to Joe (assuming none of it was sold already). This amount is totally immaterial to the overall valuation of Joe. The total remaining holdings in WSWB, WSB and WC are a dot on the Joe landscape. It's the other giant tracts of land in Deland, Tallahassee, Jacksonville, etc that make the difference in valuation and it is a huge, huge stretch to think this land is worth $100k per acre on average.

[wrobert]

I think I will go buy some Ford and GM and be done with it all.

[YoungFT]

You continue to miss the big picture.

It happens to the best of us.

I have no personal interest in pumping the stock I just think it's a great time to buy the stock. I do think that JOE stock is the best indicator out there for anyone who actually owns land in SoWal of what the value of your asset is (I'm still dreaming of the day when I can say I own a piece of paradise)

As for JOE's stock price, I don't know of a single place in the US that has as good a barometer of the value of land than JOE is for Nwest Florida. It's holdings are a great cross-section of rural, resort and forestry and it trades much more liquid than the underlying land.

This is just my humble opinion but JOE stock falling from a peak trading range of $70-80 per share to a more recent trading range of $30-40 per share is as good a reflection as you'll find anywhere of where prices are likely to bottom for land in Nwest Florida.

In other words, land will have fallen about 50% from the peak when prices have bottomed. JOE stock got to the bottom quicker and will also reflect the slow climb back faster than the land itself.

My $.02

[SHELLY]

SHELLY, I thought shorting was now illegal?

Shorting stocks is not illegal.

The SEC produced a list of companies which traders are temporarily banned from shorting...JOE wasn't on the list.


.

[SHELLY]

Excellent question! Are shorters like flippers?

No, shorters aren't like flippers--"Day-traders" are like flippers...only without the insurance payments, HOA fees, maintenance costs, 6% commission to sell and granite countertops.

.

[wrobert]

It happens to the best of us.

I have no personal interest in pumping the stock I just think it's a great time to buy the stock. I do think that JOE stock is the best indicator out there for anyone who actually owns land in SoWal of what the value of your asset is (I'm still dreaming of the day when I can say I own a piece of paradise)

As for JOE's stock price, I don't know of a single place in the US that has as good a barometer of the value of land than JOE is for Nwest Florida. It's holdings are a great cross-section of rural, resort and forestry and it trades much more liquid than the underlying land.

This is just my humble opinion but JOE stock falling from a peak trading range of $70-80 per share to a more recent trading range of $30-40 per share is as good a reflection as you'll find anywhere of where prices are likely to bottom for land in Nwest Florida.

In other words, land will have fallen about 50% from the peak when prices have bottomed. JOE stock got to the bottom quicker and will also reflect the slow climb back faster than the land itself.

My $.02

Thanks. Your thoughts are pretty much what I was thinking when I got it. I do not have much money to play with, so I tend to wait a long time, buy something, hold it until it doubles then sell half and do it again. Been doing that for about 10 years now and so far it has worked. I started with a chip maker called IDTi and now I have Microsoft, Prepaid Legal, and St. Joe. I looking for one more.

[AAbsolute]

If JOE does not manufacture anything and sells the only product it owns (land) how will its stock ever be worth more than it is today? The way I understand it the value of its stock should continue to decrease until it closes shop.

Wouldn't someone looking for a valuation on JOE simply calculate the value of its total land and divide it into the total shares of stock?

[YoungFT]

Great question. When JOE sells off the land anything not used to pay expenses will stay on the balance sheet, be re-invested somewhere or paid back to the shareholders in the form of dividends or stock buy backs.

Re-investments can be through joint ventures or operating companies managing resort properties, as an example.

When the market comes back to life, and JOE is able to start selling it's assets, how JOE decides to steward that capital (dividends, reinvestments, buybacks, etc.) will be another data point to re-evaluate the long-term attractiveness of the stock.

[AAbsolute]

Thanks for the points. I'd love to hear what Smilin Joe, Goofer44 and TheSheep have to say about the idea. All three seem to be pretty well versed on these concepts.

I know I should be more thoughtful. I don't know why I never thought of JOE as a company who would actually try to grow their business into new areas beyond the liquidation of their holdings.

[TheSheep]

Thanks for the points. I'd love to hear what Smilin Joe, Goofer44 and TheSheep have to say about the idea. All three seem to be pretty well versed on these concepts.

I know I should be more thoughtful. I don't know why I never thought of JOE as a company who would actually try to grow their business into new areas beyond the liquidation of their holdings.

Expect JOE to reinvent itself as it becomes cash heavy, acquisitions such as the Arvida deal (not necessarily that direction) launched JOE into the development business bigger-time without the pangs and pains. As the years toll on, there will be regionally strong developers who have the infrastructures, market positions and raw land in areas south from most of JOE's holdings.

There is also the potential mix of placing debt and equity on properties that they have no development stake.

[TheSheep]

Thanks for the points. I'd love to hear what Smilin Joe, Goofer44 and TheSheep have to say about the idea. All three seem to be pretty well versed on these concepts.

I know I should be more thoughtful. I don't know why I never thought of JOE as a company who would actually try to grow their business into new areas beyond the liquidation of their holdings.

One additional possibility. The unpermitted lands may be useful, (HABU MOF) as mitigation banks. Most JOE middle-of-somewhere land that I have seen meet the criteria i.e. they need restorative work, or complete overhauling, to return them to their original eco-viability or to a planned need (uplands protecting wetlands, buffering, seagrass/marsh enhancements yada talk talk yakkity yak I will come back. Mitigation credits are increasing in price with no relationship to land price stagnation.

[AAbsolute]

Isn't there some proximity criteria to mitigation lands? I thought it had to be located within a certain distance of the environmentally encumbered piece.

[wrobert]

Isn't there some proximity criteria to mitigation lands? I thought it had to be located within a certain distance of the environmentally encumbered piece.

I am certainly no expert, but I do not believe so. I have overheard conversations where people are buying rights to land miles away from where they are going to take the wetlands in order to get a project approved.

[TheSheep]

I am certainly no expert, but I do not believe so. I have overheard conversations where people are buying rights to land miles away from where they are going to take the wetlands in order to get a project approved.

Typically, you purchase mitigation credits from an established mitigation bank to offset unavoidable impacts at your development project, it is most suitable to purchase those credits from within the same geography, watershed or similar ecosystem.

If you purchase land away from your development project and mitigate/restore it, it is more costly, riskier and much more time consuming especially if the land purchased is outside of your development project geography, watershed or similar ecosystem.

[Bob]

I'm no accountant but I don't believe JOE will be exchanging any of their existing property for property they don't already own.

As far as the point of view that JOE is overvalued it all comes down to the assumptions.

Is a reasonable assumption around entitled acreage really as low as $100,000 per acre? I don't ever recall a time in the past 8 years when you could buy a full acre in any JOE community for anything close to $100K. I could be mistaken - it's been known to happen.

I also think the margin assumptions are pessimistic. When values stabilize (it will happen eventually), JOE's "adjusted" model is pretty well positioned to do better than 50% margins.

I can guarantee you this: the market will rise and fall going forward. That you can bet your house on!

by "all they want" i am referring to a portion of sales for more low basis land as they have done in the past...no taxes due